Monday [was] the first Tax Day under the new Republican tax bill passed in December 2017, and the results are not what Democrats and their media apparatus predicted. Many Americans are discovering that they are not only alive and well, but indeed paying less taxes.
As Ben Casselman and Jim Tankersley pointed out in The New York Times, there is a disparity between what Americans thought they would be paying the IRS this year, and what they actually paid. This myth, “appears to flow from a sustained — and misleading — effort by liberal opponents of the law to brand it as a broad middle-class tax increase.”
What falsities did these liberal opponents tell the American people would happen pending the passing of the Tax Cuts and Jobs Act? Here are a few of the most outrageous examples of fear-mongering.
1. 10,000 People Will Be Killed Every Year
Economist and former Treasury secretary Larry Summers wrote in a Washington Post op-ed that “the conclusion would follow that the tax bill would result in 10,000 extra deaths per year.” On CNBC’s “Squawk Box,” he explained why he thought the bill was “very dangerous.”
“When people lose health insurance, they’re less likely to get preventive care, they’re more likely to defer health care they need, and ultimately they’re more likely to die,” he said.
2. The Tax Bill Is ‘Akin To Rape’
Bruce Bartlett, a writer and former Treasury official, said the bill would not create a single job, that Republicans want the poor to pay more taxes to force them to work more, and that the bill is “really akin to rape.”
3. ‘Armageddon’ and the Worst Legislation Ever Considered By Congress
Speaker of the House Nancy Pelosi, who was minority leader at the time the bill was passed, said the tax reform bill was “the worst bill in the history of the United States Congress.”
When a reporter asked her later about her hyperbolic descriptions, she replied, “No, it is the end of the world. The debate over health care is life and death. This is Armageddon.”
4. Grad Students Will Have to Quit Doctorate Programs
When graduate students were told their tuition waivers for working as teaching assistants and researchers would become taxable, they calculated that their taxes would increase by 61 percent.
As she started to do the math, tears welled up.
‘I would have to drop out,’ she said. ‘If this tax bill passes, I can’t support anyone, I can’t even support myself.’
5. America Is Dead
At least, according to Kurt Eichenwald.
America died tonight. Economic suicide adopted to feed the insatiable greed of donors, who have been refusing to dole out $ to GOP until they got their tax cuts. Voters fooled by propaganda and tribal hatred.
Millenials: move away if you can. USA is over. We killed it.
— Kurt Eichenwald (@kurteichenwald) December 2, 2017
6. Republicans Want to Kick the Poor, Middle Class In the Face
Washington Post columnist Catherine Rampell described the ways Republicans are using higher taxes to “plan to punish the poor and middle class.”
I used to think the Republican Party’s obsession with top-heavy tax cuts was about pleasing wealthy donors and maybe also fulfilling some misguided Randian fantasy. If the poor and middle class happened to be collateral damage, so be it.
But it’s starting to look like shafting the little guy has become a feature, not a bug, of the GOP’s budget-busting tax plan.
The left-leaning Tax Policy Center reported that 91 percent of middle-class taxpayers are getting a tax cut this year.
7. Most People Are Getting Bigger Paychecks. Here’s Why That’s Bad
Rick Newman at Yahoo Finance wrote about a looming “tax surprise” in 2018, without ever explaining why giving the government a smaller interest-free loan with every paycheck might be better than a fat refund.
The TCJA lowered the overall tax burden for about two-thirds of workers, leaving a majority with slightly larger paychecks. But a quirk could leave some taxpayers with an unhappy surprise as they file their 2018 returns this year, and find that the refund they were expecting is smaller than before. Some people accustomed to a refund could even end up owing money, instead.
8. New Yorkers Allege All Americans Will Suffer
The day before the tax bill was signed in December 2017, protesters staged a “die-in” on Wall Street, near the New York Stock Exchange. One protester laying on the ground held a sign in the shape of a gravestone that read, “RIP/tax scam helped the rich/not me.”
“If we don’t stop this, we, the young people, are not going to have a future,” the protester, Nova Felder, told City and State New York.
A number of New York community leaders participated in the protests, too. “All of us will suffer as a result of those who care more about corporations than they do about the people,” said New York City Public Advocate Letitia James.
9. An Endless, Global Recession
“We are very probably looking at a global recession, with no end in sight,” wrote New York Times columnist Paul Krugman. “I suppose we could get lucky somehow. But on economics, as on everything else, a terrible thing has just happened.”
More from Casselman and Tankersley:
Experts are divided on whether the tax law was a good idea. But there is little disagreement on this core point: Most people got a tax cut.
The Tax Policy Center estimates that 65 percent of people paid less under the law and that just 6 percent paid more. (The rest saw little change to their taxes.)
Other analyses reached similar conclusions. The Joint Committee on Taxation — Congress’s nonpartisan team of tax analysts — found that every income group would see a tax cut on average. So did the Institute on Taxation and Economic Policy, a left-leaning think tank that was sharply critical of the law. In fact, that group went even further: In a December 2017 analysis, it found that every income group in every state would pay less on average under the law in 2019.
So far, tax season seems to be playing out more or less as the experts predicted. H&R Block, the tax-preparation giant, said last week that two-thirds of returning customers had paid less tax this year than last (excluding people who owed no tax in either year). Taxes were down, on average, in every state.
“The vast majority of people did get a tax cut,” said Nathan Rigney, an analyst at H&R Block’s Tax Institute. That’s been clear all along, he added, “just now we have real data to back that up.” …
The tax savings were relatively small for many families, however. The middle fifth of earners got about a $780 tax cut last year on average, according to the Tax Policy Center.
Most Americans would probably welcome a $780 windfall. But in contrast to 2001, when President George W. Bush’s Treasury Department mailed rebate checks to taxpayers, last year’s tax cuts showed up mostly in the form of lower withholding from workers’ paychecks. A few extra dollars in a biweekly paycheck proved easy to miss. Moreover, as taxpayers filed their returns, many found they were due smaller refunds than in the past, which may have further skewed perceptions of the law.
“Most people didn’t recognize the increase in take-home pay, or at least didn’t attribute it to the tax cut,” Mr. Rigney said. Some of them might realize it now that they’re filing their taxes, he said, but “it’s little consolation to discover that you received a couple thousand dollars during the year but you already spent it.”
High earners did far better under the law. The top 20 percent of earners received more than 60 percent of the total tax savings, according to the Tax Policy Center; the top 1 percent received nearly 17 percent of the total benefit, and got an average tax cut of more than $30,000. And that’s not even factoring in the law’s huge cut to corporate taxes, which disproportionately benefit the wealthy households that own the most stock.
Surveys consistently show that what bothers Americans most about the tax system is not that they pay too much but that they think corporations and the wealthy pay too little, said Vanessa Williamson, a political scientist at the Brookings Institution who studies public attitudes toward taxation. The tax law only sharpened those concerns.
Envy is a sin. And if that’s how most Americans feel, most Americans are wrong.
John Phelan adds:
Data from the Tax Foundation shows just how ‘progressive’ the system is. In 2016, the top 10% of income earners earned 46.6% of all income in the U.S. and paid 69.5% of the total income tax received by the federal government. The top 1% of income earners earned 19.7% of all income in the U.S. and paid 37.3% of the total income tax. In other words, the top 10% of income earners pay, as a percent of total taxes, 50% more than what they earn. The top 1% pay, as a percent of total taxes, twice what they earn as a percentage of total income. When people say that the rich should pay their ‘fair share’, how much more disproportionate those people want these numbers to be?
‘The rich’ generally work for their money
Ok, but the predictable response to this graph is that the rich don’t make most of their money off income but instead off capital gains and other sources which are taxed at much lower rates.
This was one response I saw to this data. It it wrong. As I wrote last week, in a recent paper for the National Bureau of Economic Research titled ‘Capitalists in the Twenty-First Century’, economists Matthew Smith, Danny Yagan, Owen M. Zidar, and Eric Zwick ask the question “Are the richest Americans idle rich—who derive most of their income from their non-human capital—or are they entrepreneurs and other working rich—who derive most of their income from their human capital?”
After examining the data on how the top income earners make their money, their answer is that,
Consistent with the labor income view…top earners are predominantly working rich rather than idle rich, and that the majority of top income accrues to the human capital of these wage earners and entrepreneurs.
It isn’t popular to stick up for ‘the rich’ these days. But the data shows that, generally, they work for their money. It also hows that they pay a disproportionate share of income tax. As a consequence, a tax cut is going to ‘disproportionately’ benefit ‘the rich’; they pay a ‘disproportionate’ share of the taxes.